Parent Has Purchased Additional Shares of Subsidiary Stock

question 33

Multiple Choice

Parent has purchased additional shares of subsidiary stock.If the original investment blocks are carried at cost, the conversion to simple equity is based upon

• A)​the difference in subsidiary retained earnings at the beginning of the current fiscal year and the retained earnings when the first block was acquired.
• B)​the difference in subsidiary retained earnings at the beginning of the current fiscal year and the retained earnings when the block giving a controlling interest was acquired.
• C)​the difference in subsidiary retained earnings at the beginning of the current fiscal year and the retained earnings of each block at its acquisition.
• D)​the difference in subsidiary retained earnings at the beginning of the current fiscal year and the retained earnings when the last block was acquired.

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